what is a "fair" unpaid Direct Debit charge?

jambosans

Nathan_Spleen wrote: »

It's not my opinion but the view of a barrister who has worked extensively on the issue.

It's all about the terms.

Unlike a utility regulator, the Office of Fair Trading have no statutory powers of price control and so brought investigation and test case litigation under UTCCR - Unfair Terms in Consumer Contracts Regulations.

Because there is no provision in law to retrospectively alter a contractual term, if a term is deemed unfair it is automatically struck down from the contract rendering the charge relating to it as nul & void. This is why people who think that any eventual refunds will be minus any new charge level are wrong.

The same cannot be said if the charges had been deemed as penalties because a judge would likely allow the banks to retain the cost of administering the default.

So in the instance were the OFT is able to assess bank charges for fairness under the UTCCR, if they, for example, deem a term unfair that has a charge attached, the term and charge may be removed completely? Please note I am not deliberately trying to pick a part your response I am merely trying to gain clarity on this complex issue (and avoid responding like others on this thread who choose to ignore valid points). What powers would the OFT have to enforce such a change to a banks terms and conditions? As you have rightly said they are not a regulatory body, so I would imagine that if the bank refuses to accept the assessment it may end up in court? Although, if the appeal fails, and the test case is a success I doubt banks would go against anything the OFT recommends.

I think were I became confused is the ruling on penalties and assesment of unfair terms by the OFT. Instead of treating them as two seperate issues I have previously understood them to be connected. OFT says charges are penalties; High Court disagrees; OFT given right to assess charges for fairness under UTCCR; banks appeal to House of Lords. Once the penalities issue had been ruled in favour of the banks I assumed (incorrectly) that the OFT being allowed to asses charges for fairness was like "second prize" (in layman's terms), meaning charges were here to stay but their amounts may change if the appeal is thrown out. I fully accept were I have misunderstood this point, even through extensive reading on the subject I had not grasped this point until you highlighted it, and now makes sense.

Nathan_Spleen

Not at all jambosans, it's a very complicated issue. I've attended every single day of all the test case hearings, read all the judgments and transcripts and I can barely grasp it myself.

Essentially the UTCCR investigation and test case litigation will have entirely seperate outcomes for past/current and future charges.

1) As I said in my previous post, if the OFT win, past and current charges will be nulled in there entirety as there is no other way of dealing with the unfair terms relating to them, other than to strike them from the contracts

2) As for future charges the OFT have already stated that the banks should be allowed to charge something for administering defaults and they are currently in the process of analysing the banks costs and negotiating a fair charge. Unfortunately that's not the end of it as inevitabley the OFT's view on what a fair charge should be will differ from the bank's and the banks will then challenge the OFT's figure in court, prompting more hearings and appeals. This is because the OFT don't have the power to set a fair charge as such. Only a court can decide what is a fair charge.

At the moment the test case litigation is still dealing with the 'preliminary' issues (whether the terms can be assessed for fairnesss) and once the House of Lords upholds that they can then the litigation moves onto the 'substantive' issues - what a fair charge should be. Of course the litigation of the substantive issues will have no baring on historical & current charges as once the House of Lords upholds the right to assess the charges under UTCCR as unfair these charges will have to be refunded.

willo65

Nathan_Spleen wrote: »

Indeed. Floor limits are set and authorised by the banks so how making a payment within the banks' own limit can be described as theft is beyond me.

Also his other example of ''theft'' - writing a guaranteed cheque without sufficient funds - is equally erronious as the the bank clearly authorise it in advance by guarrenteeing the cheque.

I'm not sure what position this character holds at the bank but if it's anything other than emptying the bins I'd find it genuinely disturbing that he could be responsible for running and making decisions on people's accounts when he is unable to make the distinction between a customer exercising a legitimate contractual right and stealing.

I can honestly say that if willo65 had any connection to a bank I held an account at I would close it in a heartbeat.

the cheque is guranteed using a cheque guranteed card the bank gave to you to use when you have funds to cover the cheque you are issuing, it is not a card for you to abuse and force the bank to pay cheques you know you had no funds for.

Therefore you are guranteeing to pay something using the banks money which they cannot refuse as you have guranteed it and if the money isn't yours then this would still be theft.

I find it quite disturbing that people are allowed bank accounts if they can't do basic math and workout how much money they have to spend and how much they don't.

willo65

Sol00 wrote: »

I'd be happy to know where you got those statistics from.

It is based on my day to day dealings with accounts.

Nathan_Spleen

willo65 wrote: »

Therefore you are guranteeing to pay something using the banks money which they cannot refuse as you have guranteed it and if the money isn't yours then this would still be theft.
.

For someone who is unable to even spell 'guarantee', I doubt whether your limited knowledge extends to understanding the meaning of it.

Who guarantees the cheque? The customer you say?

petermb_2

So what is a customet?

A female customer?

Nathan_Spleen

petermb wrote: »

So what is a customet?

A female customer?

Beats me.

http://lmgtfy.com/?q=what+is+a+customet%3F

iscrimger

I believe they should charge us for unpaid Direct Debits but not as much as they do.

They should allow the transaction to go ahead then charge a percentage of the amount from say a minimum of £5 to a maximum of £30.

I personally wouldn't mind paying so long as the transaction went through.

My own personal example is that last year on several occasions a DD for £10.81 was declined as it was coming out the day before my salary. I was then charged £30 for a failed direct debit & then £20 for going over my authorized overdraft - which was the whole reason the original DD was refused! £50 in charges for a DD worth £10! Ridiculous!

natweststaffmember

willo65 wrote: »

It is based on my day to day dealings with accounts.

Willo65, getting away from your job. You deal with customer's every day. Do you believe that it was the intention of the individual to deliberately exceed their overdraft?
You can see the consequences of that action, and you can see that only in about 0.000000001% of cases is there a deliberate attempt to spend money that an individual doesn't have. Do you believe the resultant charges that are levied even for, shall we say, a £2-£5 miscalculation, of maybe £50-£60 is fair?
I didn't when I worked in the bank. I understood how people miscalculated or got themselves into that situation, for example, assuming the card wouldn't work if it was declined yet not understanding floor limits. Even if I do understand that and even if the overdraft has been exceeded, the level to which the charge has been administered worsens the situation. For example, £50 loss(charges), charges by the Direct debit provider for late payment, and the bill still isn;t paid.
I'm on JSA which means that I get £128 every 2 weeks. If I am in that scenario, then I have so far lost almost half my weekly allowance to live on(I still haven't paid that bill either). Is that fair?

Sol00

willo65 wrote: »

It is based on my day to day dealings with accounts.

I doubt you would know, or be told the reasons for customers going over their limits.